FM address to STUC annual conference 2012

The theme of this year's STUC Congress is a fitting one. "There is a better way" says Scotland's First Minister Alex Salmond.

The theme of this year's STUC Congress is a fitting one. "There is a better way".

The Scottish Government has consistently argued during the last four years that there is a far better way of promoting sustainable recovery than the policies imposed by this UK Government and indeed by its predecessor.

Congress, that is why we have chosen within the limited parameters of UK fiscal policy to take a different path - where we can - from the Westminster Government.

We have supported growth in the teeth of the worst recession of the post-war era, leading to the downturn in Scotland - while severe and damaging - being shorter and shallower than elsewhere in the UK.

We have used capital investment to kick-start the economy.

We have promoted a social wage to maintain the spending power of ordinary families.

And we are building a sustainable economy for the next generation - reindustrialising Scotland as we support growth in the industries of the future.

Back in 2008-09 we took swift and decisive action to promote economic recovery by investing in our infrastructure and our people, despite capital budgets being cut by 30% by the UK government over the spending Review period.

We brought forward more than £300 million of capital spending in 2008-09 and 2009-10 - supporting 5,000 jobs. Over the next three years, we are switching £750m of spending from resource to capital in order to upgrade our infrastructure and support economic recovery. However that leaves a gap last year and this.

In February I met the Prime Minister and he told me that they were interested in capital projects which could be applied now, in this financial year.

Last week I wrote again to David Cameron, six weeks after my first letter at his request, asking him to provide additional funding for £300 million of "shovel ready" capital projects across the country - projects which would improve our long-term productivity while helping to promote economic recovery now.

As important as investing in physical capital, is the investment in human capital.

Last month, I announced that we had delivered more than 25,000 modern apprenticeships during the previous twelve months - every one of which is linked to a real employment opportunity.

I can tell this Congress that the final figure for Modern Apprenticeships for last year was 26,427 - about 60% higher than it was in 2007 - and that the completion rate has increased again to a record 75%.

Our "opportunities for all" initiative guarantees a training opportunity to any young person aged between 16-19 who is not in education, employment or training.

We have retained Educational Maintenance Allowances - absolutely critical in terms of the job prospects of people with relatively poor life chances, to encourage and support them in remaining in education - when the UK Government has chosen to abolish them.

And we have appointed Angela Constance as the first dedicated Minister for Youth Employment anywhere on these islands, an initiative called for and welcomed by the STUC.

Last week's employment figures were encouraging. Scotland had the biggest fall in unemployment in over a year, and now has lower unemployment, higher employment, and lower economic inactivity than the across the UK.

However, there is still much more to do. In particular, although men's unemployment has fallen strongly over the last twelve months, women's unemployment has risen sharply and is now higher than men's - 8.2 per cent compared to 8.0%.

We have already been working with the STUC on issues such as how we attract more women into manufacturing industry, and women's employment was discussed in detail at the bi-annual meeting with the STUC General Council in February.

We recognised then that the special National Economic Forum on youth employment had helped focus the public, private and voluntary sectors on actions to help young people to find jobs.

And I want to use that 'Team Scotland' model to find ways to help women back to work. Working with STUC, who proposed the idea, and others, we will hold a summit on women's employment, adopting the same model as the summit on youth employment.

We know that some of the initiatives that are underway will produce change over the medium term.

Apprenticeships in Scotland have increased from 16,000 to 26,000 in the last five years. But just as encouraging is the gender balance. The number of women participating in apprenticeships has risen from 27 per cent to 43 per cent. Other training initiatives are also showing strong rises in female participation.

We cannot and should not allow a situation where the talents and abilities of the majority of the population are underutilised. We should not tolerate it as a country and we can't afford it as a society.

And so the Women's Employment Summit will look at how we can focus all our efforts on helping create more jobs and helping more women find jobs. The Government is committed to doing everything that we can to help families through tough economic times and I regard this is an important step forward.

I believe that there will be cross-party support for this initiative - and I will ensure that all parties are invited to contribute to the summit.

In all of these actions to support recovery, we have shown that there is a better way of promoting economic recovery than merely following the UK Government's austerity programme of cuts. And that better way most be one which recognises the value of investing in infrastructure, in services and, above all else, in our people.

That is why we have promoted the economics of security and equity; recognising that confidence among ordinary households - the confidence to plan and to spend - is absolutely central to lasting economic recovery in Scotland.

We have a policy of no compulsory redundancies in the Scottish Government and through agencies and the health service. As you know, that doesn't mean that there is no reduction in public sector numbers, but it does provide economic security for the workforce - just as we established and promoted a living wage of £7.20 an hour to promote economic justice. And I hope, and believe that these initiatives will be carried right through local government in the very near future.

And while the UK Government's budget proposed anti-social tax cuts for a minority, we have been promoting a social wage for ordinary households.

We have made a shared commitment in Scotland to provide certain services - such as university tuition, and prescription medicines - which are not prioritised in other parts of these islands.

And we will build on that principle in this Parliament. For example, we will introduce legislation to extend affordable childcare provision. Since 2007, the Scottish Government has already increased the funded pre-school entitlement from 412.5 hours to 475 hours per year.

By 2014 we will legislate for a minimum of 600 hours across the country as a statutory right. Crucially, we will also make provision more flexible to support parents in work, training or education.

However, this Congress, and certainly this Government, is aware that the Scottish Government and the Parliament in Scotland, only has limited powers. We do not currently have full control of fiscal policy, of borrowing powers or of welfare reform. As a result, we are effectively trying to support economic recovery with one had tied behind our back.

For example we are profoundly concerned about the UK Government's plans to abolish existing Council Tax Benefit in its Welfare Reform Bill, and the extremely short timescale within which this is proposed to be implemented.

The 10% cut being applied to the funding for Council Tax Benefit is a disgrace. How can the Prime Minister argue that he is a compassionate conservative when his Government is potentially reducing household incomes in Scotland for more than half a million of the most vulnerable members of society?

Of the 560,000 individuals in Scotland who currently receive Council Tax Benefit, around 240,000 are pensioners and almost 90,000 are lone parents. The average benefit per household is £14 a week and it helps - and is targetted at helping - the lowest income families in the country.

Fortunately, the fact that Council Tax Benefit - even with 10 per cent reduced funding - is being devolved to Scotland gives us the opportunity to mitigate the effects of this cut-back.

And so, with our colleagues at Cosla, we announced on Thursday that we have agreed with Cosla to cover the £40 million cost of the cuts in 2013-14 - enabling us to protect some of the most vulnerable people in our society.

Thursday's announcement indicates the benefits of being able to take a different path from Westminster.

However, in the vast majority of areas of welfare budgets we have no such discretion. Only with real powers can we ensure that the welfare system reflects Scotland's values.

The final strand of our alternative approach - the better way - to economic growth is to promote a long-term vision for the Scottish economy.

Last year when I addressed this Congress I spoke to you about the prospects for the reindustrialisation of Scotland - how Scotland's engineering and manufacturing expertise would be harnessed to develop our astonishing renewable energy resources.

12 months later, that vision is already starting to become a reality. Twenty miles north of here, at the Nigg Fabrication Yard, I opened the Nigg Skills Academy just last month.

That academy will provide training opportunities for 3,000 people over the next 18 months, helping to fill the employment opportunities generated by Global Energy's purchase of the Nigg yard.

Nigg will be re-established as the beating industrial heart of the Highlands of Scotland.

Two weeks ago I spoke to the Chief Executive of Gamesa about his company's ambition to turn Leith into its UK manufacturing base. As a result of Gamesa's £100m investment, up to 1,000 people will be employed there in the production of offshore wind turbines.

It was announced in February that the new UK Offshore Renewable Energy Catapult Centre would be based in Glasgow - following on from the £90 million technology and engineering centre for Strathclyde University announced by the Scottish Government and Scottish Enterprise last year.

At the end of January Samsung announced £100m of investment in a facility for testing wind turbines at the Green Energy Park in Methil in Fife, potentially creating more than 500 jobs.

In Dundee, Scottish and Southern Energy are working with Forth Ports, Dundee Council and Scottish enterprise to develop Dundee as a renewables hub.

Across Scotland, cities and harbours which were central to Scotland's world-leading role in the industrial revolution, are now once again becoming manufacturing hubs for the engineering revolution of the 21st century - the move to a low carbon economy - the design, the engineering, the fabrication, the Research & Development and the servicing of the great offshore energy technologies that will dominate the electricity provision of this century.

Now I understand that Scotland's growing reputation in the renewables revolution is attracting a fair bit of international interest - most of it favourable, some of it, or at least one of it, somewhat less so.

So I want to be clear, Congress. We welcome investment in Scotland, in industry, technology and in golf courses.

But investing in Scotland does not imply ownership of Scotland and in particular the energy policy of this country will be determined by the people and the Parliament of Scotland and not by any other party.

Fortunately, almost all of the international interest in Scotland from business has been overwhelmingly favourable.

Companies such as Michelin, Glaxosmithkline and Avoloq have all announced major investments in Scotland in the last twelve months.

The current Ernst and Young UK Attractiveness survey rates Scotland as the most successful part of the UK at attracting inward investment, in terms of jobs created.

And fDI magazine in February ranked Edinburgh and Glasgow as first and second in Europe among its large cities of the future.

Scotland is already using its immense assets to create a sustainable and prosperous future.

With independence, however, we could do even more - we could use fiscal powers to support growth and create jobs.

One of the concerns which has been raised about the current constitutional debate is that businesses will be deterred from investment in Scotland by "uncertainty."

Such a claim flies in the face of all the evidence since the SNP won a majority in May.

But let me tell you about real uncertainty.

Uncertainty is caused by taking more than four years to get banks lending to small businesses.

Uncertainty is caused by making changes to the system of taxing offshore oil and gas without any prior consultation.

Uncertainty is caused by Conservative party briefings against renewable energy.

Uncertainty is caused - especially to some of the most vulnerable members of society - by ill-considered welfare reform and by council tax benefit cuts.

Uncertainty is caused to the third sector by ill-explained changes to tax relief rules for charitable donations.

And uncertainty is caused by floating the possibility of changes to the devolution settlement after the independence referendum, without saying anything at all about what those changes might be.

If the UK Government is really so concerned about uncertainty, it should stop doing its best to create it.

I completely understand, of course, that trade unions will have entirely legitimate questions about independence.

I am sure that the STUC will play a valuable role in helping to air those questions. In particular, I welcome the role you are playing in the Future of Scotland campaign to encourage discussion of what Scotland should look like in the future.

Over the next two years, the Scottish Government will argue consistently and clearly that independence is the only way to give Scotland the full range of powers that we need to deliver sustainable economic growth and social justice.

There is no doubt that devolution has brought major benefits to Scotland. All the evidence - most notably last May's election - suggests that people largely like what the parliament - not just the SNP - have done with the powers we have under devolution -public health measures such as the ban on smoking in public places; social measures such as free tuition fees or justice for victims of pleural plaques; and our promotion of Scotland as a fantastic place in which to work, live, visit or invest.

On many policies, under devolution, Scotland has already shown that there is a better way than that adopted by the UK Government.

Like you, I believe passionately that there is also a better way of promoting economic recovery, delivering welfare reform or promoting social justice.

At present, however, on those issues we can only demand action from Westminster. With independence, with real powers, we could actually deliver for Scotland in these areas.

Independence would allow us to take the decisions about taxation, welfare and foreign policy that are routinely taken by independent nations around the world. It would mean that the people who make decisions about the future of Scotland are the people who care most about Scotland - the people who choose to live and work here, regardless of their backgrounds or their country of origin.

It would place Scotland's future in Scotland's hands. And by doing so, it would finally give us the powers we need to make our country as good as we know it can be.